Baltimore Sues Kalshi and Polymarket Over Alleged Gambling Law Violations

The City of Baltimore and Mayor Brendan Scott have initiated legal proceedings against Kalshi and Polymarket, alleging violations of local gambling statutes. The lawsuits contend that the prediction market companies operate “illegal, unlicensed sports-betting platforms” and have misrepresented the “legality and regulatory status of their products” to users.

Baltimore's complaint against Kalshi also named Robinhood, Webull, and Coinbase as partners of the prediction market platform. These entities face accusations of deceptive practices for marketing sports contracts as legally tradable in Maryland. This legal action against prediction market firms represents a continuation of disputes between US state and federal authorities, with many observers anticipating a potential appeal to the Supreme Court.

The US Commodity Futures Trading Commission (CFTC), led by Chair Michael Selig, and various companies have maintained that event contracts on prediction markets fall under the CFTC's jurisdiction as “swaps.” However, both Baltimore's lawsuits and other state-level authorities dispute this claim. A spokesperson for Polymarket commented that city-specific actions contradict the CFTC’s established regulatory framework for prediction markets, noting that courts have recognized prediction markets on CFTC-registered exchanges are governed by federal law, not disparate state and local regulations.